TUSCON, Ariz. - Insurers that are rushing to sell variable annuities through banks should look before they leap, a top insurance executive warned.

"Many banks are inexperienced and will fail" at selling investment products, said Eli Broad, chairman of SunAmerica Inc.

And banks that remain in the business will want their annuity providers to help deal with "sticky" issues, such as disclosure, investor suitability, marketing practices, and expanded regulation, he said.

"Granted, banks are lining up to offer variable annuities," he said. "But if we're not careful, all that glitters may not be gold."

Mr. Broad struck his cautionary tone in a keynote address to 350 at a three-day bank sales conference sponsored by the National Association of Variable Annuities.

Executives said most of what they heard at the conference was encouraging. They were especially cheered by newly released figures that show, despite the slump in the stock and bond markets, $3.75 billion of variable annuities were sold through banks last year. The total is up from $2.82 billion in 1993, when fewer banks were offering variable annuities, said Rick Carey, editor of Variable Annuities Research Data Services Report, a newsletter.

Mr. Carey also said that banks current 7% share of total variable annuity sales will nearly triple - to 20% - by the turn of the century.

Variable annuities, tax-deferred products whose performance is based on an underlying basket of mutual funds, are especially popular with people planning for retirement. And banks, with their access to 82 million homes, are seen as a prime distribution channel.

But Mr. Broad, whose own Los Angeles company is a big seller of annuities through banks, and other executives urged their colleagues to step carefully.

Insurers should look to form partnerships with banks that already have a proven track record in selling investment products, Mr. Broad said. This is especially true when partnering with a bank to offer a proprietary annuity - a project that requires a lot of up-front capital from the insurer and aggressive asset gathering by the bank, Mr. Broad said.

Other executives said insurers should provide technology and support that will help banks when they stumble.

Banks will get into the business of marketing annuities "essentially by trial and error," said Bayard F. Tracy, senior vice president at American Skandia Life Assurance. "They are coming up a learning curve."

Aside from learning about the products, banks must also learn to sell, rather than just take orders, Mr. Tracy said.

"This isn't like a 'field of dreams,' (where) if we offer product, people will come," he said. "Creating an efficient sales culture at banks will take time."

The insurance company executives were right on the mark, one banker said.

"There is no question banks approach this (business) differently," said William A. Valerian, president of Home Federal Savings Bank, Cleveland. "We have regulatory and cultural issues to deal with. Insurers that understand that will do well with banks."

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